AOL Considers Free Services

AOL is looking at offering its services, including e-mail, for free to customers with a broadband Internet connection, according to a news report.

AOL Chief Executive Officer Jonathan Miller presented the idea to other executives at AOL corporate parent Time Warner last week, according to a story in the Wall Street Journal. Under the plan, AOL would stop charging subscription fees to customers who buy Internet service from another provider, the Wall Street Journal said.

A Double Standard

Subscribers with AOL dial-up service would continue to pay subscription fees. AOL subscribers get e-mail service, as well as virus protection and other security services.

The plan comes as AOL looks for ways to counter a decline in subscribers. In the first quarter of this year, AOL had 18.6 million subscribers in the U.S., down by 3.1 million from a year earlier. AOL's revenue declined 7 percent to $2 billion in the first quarter of this year, driven by a 13 percent fall in subscription revenue. Advertising revenue increased 26 percent, offsetting part of the subscription decline.

AOL would expect to lose about 8 million of its 13 million dial-up subscribers if it goes ahead with the plan Miller presented, the Wall Street Journal said.

European Plans

An AOL U.S. spokesperson wasn't immediately available for comment. But a UK spokesperson said AOL there wouldn't be affected by the U.S. plan.

"These proposals don't have an impact on Europe because we have different market conditions," said Phil Hale, an AOL UK spokesperson. The regulatory environment in the UK, for example, makes it easy for AOL to resell a branded broadband offering. By contrast, in the U.S., AOL offers broadband only through partners, he said.

AOL in Europe is looking for other opportunities to boost revenue. Time Warner has recently hired Citigroup to look at different options for the AOL Europe business, and Telecom Italia SpA confirmed that it has bid for AOL's France and Germany businesses. However, Hale said that AOL isn't looking to sell its entire business. AOL will retain its content operation and look for partnerships, joint ventures or outright sales of AOL's broadband business in Europe, he said recently.

Nancy Gohring in Dublin, Ireland contributed to this report.

Subscribe to the Daily Downloads Newsletter

Comments